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Dynamic Capabilities enable Business
Model Innovation. Case Study of Internal Corporate Ventures.
WILBERT BEKENDAM
Student number: 11252197
University of Amsterdam Faculty of Science
Thesis Master Information Studies: Business Information Systems
Final version: 08/21/2017
Supervisor: Dr. Erik de Vries
Examiner: Dr. Dick Heinhuis
Abstract. This paper addresses firms’ need to search for new ways to create and capture value for its stakeholders. In the pursuit of business model innovation,
dynamic capabilities enable the creation and deployment of business models new to
the firm. This issue is addressed through a case study, in the setting of internal corporate ventures within Philips Research. Semi-structured interviews were held
with 14 venture leads, innovation officers, and senior management. The interviews
demonstrated the potential business model innovations, with its multiple maturity levels. Triggered by a problem-based value proposition, business models thrive best
with the right form of autonomy, by being provided the right resources, following a
business model roadmap. Teams co-create and co-validate all key assumptions with important stakeholders, to build a minimum viable business model. Notably, the
findings all stimulate de-risking the business model, to grow customer base, and
scale from a business towards a profitable business, when having reached service – customer fit. This paper uncovered the multiple dynamic capabilities that enable the
creation and deployment of new business models.
Keywords. Business Model Innovation, Business Models, Dynamic Capabilities, Minimum Viable Business Model, Business Model Fit, Internal Corporate Ventures.
Acknowledgements
Many people have contributed to this thesis, which I would like to thank. First of all, my
supervisor of the University of Amsterdam, Erik de Vries. He has provided me with
guidance, constructive feedback, and motivational spirit. Secondly, a special thank you
to my second reader, Dick Heinhuis. Then, I would like to recognize Philips Research.
This thesis would not have been possible without the help of Kerfegar Shroff and Frank
Wartena of Philips Research, who have especially supported me with the data collection.
Since this research conducted a case study, I would like to thank all interviewees who
participated in this study for their time and effort. Lastly, I would like to thank my other
colleagues and fellow interns of Philips Research, who have provided me with their
support during my graduation internship. Enjoy reading the master thesis.
The copyright of this thesis rests with the author. The author is responsible for the content.
The University of Amsterdam is only responsible for the educational coaching and cannot be held liable for the content.
Table of Contents
1. Introduction ......................................................................................................... 1
2. Literature Review ................................................................................................ 2
2.1. Innovation ................................................................................................................................... 3
2.2. Corporate Venturing .................................................................................................................... 3
2.3. Business Models .......................................................................................................................... 4
2.4. Business Model Innovation ......................................................................................................... 5
2.5. Dynamic Capability of Business Model Innovation .................................................................... 6
2.6. Summary ..................................................................................................................................... 7
3. Research Method ................................................................................................. 8
3.1. Case Selection ............................................................................................................................. 8
3.2. Sample Selection ......................................................................................................................... 9
3.3. Data Collection.......................................................................................................................... 10
3.4. Data Analysis ............................................................................................................................ 10
4. Research Findings .............................................................................................. 12
4.1. Creation Phase ........................................................................................................................... 12 4.1.1. Foundational Aspects for Dynamic Capabilities to enable New-to-the-Firm Business Models ............... 12 4.1.2. Dynamic Capabilities that enable New-to-the-Firm Business Models .................................................... 13 4.1.3. Summary of the Findings of the Creation Phase of Business Model Innovation ..................................... 16
4.2. Deployment Phase ..................................................................................................................... 16 4.2.1. Foundational Aspects for Dynamic Capabilities to enable New-to-the-Firm Business Models ............... 16 4.2.2. Dynamic Capabilities that enable New-to-the-Firm Business Models .................................................... 17 4.2.3. Summary of the Findings of the Deployment Phase of Business Model Innovation ............................... 19
5. Conclusion ......................................................................................................... 19
5.1. The Creation of New-to-the-Firm Business Models .................................................................. 20
5.2. The Deployment of New-to-the-Firm Business Models ............................................................ 21
6. Discussion .......................................................................................................... 23
6.1. Practical Implications ................................................................................................................ 23
6.2. Limitations and suggestions for Future Research ...................................................................... 23
References ............................................................................................................. 25
Appendix ............................................................................................................... 28
Appendix A, Overview of Business Model Innovation Literature Review ....................................... 28
Appendix B, Interview Guide........................................................................................................... 29
Appendix C, Interviewee Labels ...................................................................................................... 34
Appendix D, Summary of the Findings of Creation Phase ............................................................... 35
Appendix E, Summary of the Findings of Deployment Phase .......................................................... 35
Appendix F, Conclusion of the Findings .......................................................................................... 36
Appendix G, Coding Scheme ........................................................................................................... 38
List of Tables
# Name Page Table 1. Overview of the Conceptual Model constructed based on the Literature
Review
7
Table 2. Quantitative details of Interview data 9
Table 3. Data Display of Rescue for Firm’s Survival 12
Table 4. Data Display of Psychological Barrier to Start 13
Table 5. Data Display of Business Model Trigger from Problem-based Value
Proposition
13
Table 6. Data Display of BMI is not a Process, but has Maturity Levels 14
Table 7. Data Display of Clear Milestones for Autonomous Development 15
Table 8. Data Display of Business Model Roadmap 15
Table 9. Data Display of Implementation of Business Models 17
Table 10. Data Display of Dynamic Team Competencies 17
Table 11. Data Display of De-Risking Business Models 18
Table 12. Data Display of Specific Resources for Business Model Innovations 18
Table 13. Overview of the Business Model Innovation Literature Review 28
Table 14. Interviewee Labels 34
Table 15. Summary of the Findings of the Creation Phase of Business Model Innovation
35
Table 16. Summary of the Findings of the Deployment Phase of Business Model
Innovation
35
Table 17. Summary of the Findings Contrasted with Conceptual Model based on Literature Review
36
Table 18. Coding Scheme 38
List of Figures
# Name Page Figure 1. Business Model Canvas 4
Figure 2. Conceptual Model 7
Figure 3. Cases of Internal Corporate Ventures 10
Figure 4. Overview of Data Coding Structure for the Creation Phase of New-to-the-
Firm Business Models
11
Figure 5. Overview of Data Coding Structure for the Deployment Phase of New-to-the-
Firm Business Models
11
Figure 6. Conceptual Model based on the Findings 22
1
1. Introduction
Over the last years, the pressure to innovate is constantly rising, due to shortening
product life cycles that limit revenues (Stampfl, 2016). Nowadays, many firms try to
master the innovation challenge by aiming at the development of breakthrough services
that promise higher returns on investment (Hippel, 2005). Recently, an alternative
strategy to generate revenue has come up (Zott, Amit, & Massa, 2011). Business model
innovation is an innovative approach towards the business logic of a specific firm
(Osterwalder, Pigneur, & Tucci, 2005). This shift towards innovations in the business
model is increasingly getting attention from academia as well as practice. However,
empirical studies and a basic understanding of the phenomenon are still lacking, as well
as helpful capabilities to support a business model innovation. These circumstances drive
this empirical investigation of business model innovation.
In the field of innovation research, leading scholars outline that in the coming
years business model innovation will become as important as traditional technological
innovation. And, although, firms have extensive structures for the exploration of
technologies, the commercialization of these technologies is done through their business
models (Chesbrough, 2010). For firms to develop the capability to innovate their
business models makes good business sense. Lawson and Samson (2001) mentioned that
the dynamic capabilities view is well suited for studying innovation. Chesbrough (2010)
sees business model innovation as vitally important, yet very difficult to achieve. The
barriers to change a business model are substantial, and tools will definitively not close
the gap. So, dynamic capabilities are required for firms as enablers to create, adapt and
change viable business models. However, business model innovation research has
increased tremendously in recent years, so far, there is limited research explicitly
focusing on business model innovation in the context of corporate venturing. Even
though the importance of gaining insights on business model innovation has been
recognized in scholarly debate, an understanding of the firm’s dynamic capabilities to
create and deploy new business models is still scarce. The major part of business model
innovation research focuses on new-to-the-industry business model innovations
(Stampfl, 2016), but the exploration and exploitation of new-to-the-firm business models
are not yet clear outlined. In addition, in practice, firms are heavily struggling with the
innovation of business models. As Philips is transforming their organization from
product-oriented to service-oriented, an important aspect that will thrive this
transformation are new business models. This study is supposed to fill the gap in
literature about the firm’s dynamic capabilities which enable the creation and
deployment of new-to-the-firm business models.
The research goal of this study is to get a deep understanding about the creation
and deployment of new-to-the-firm business models, and about which dynamic
capabilities enable these business models. Therefore, the following main question shall
be addressed:
Which dynamic capabilities enable firms to create and deploy new business models?
2
This main research question should lead to dynamic capabilities for firms to enable, and
support, the creation and deployment of new business models. In order to answer the
main question, three sub-questions that will help are:
1. Why, and when, does business model innovation start?
2. What are the stages of business model innovations?
3. Which dynamic capabilities enable business model innovation?
By finding answers to these questions, this research aims at contributing to academic
literature as well as to managerial practice regarding the management of business models.
2. Literature Review
Shorter product life cycles, inter-industry competition, and converging industries are key
factors requiring firms to reconfigure their business models (McGrath 2012). Business
models are becoming increasingly instable (Kaplan 2012) and competitive advantage
increasingly transient (McGrath 2013). Several studies outline the importance of
innovating a firm’s business model to overcome disruptions and secure future growth
(Zott & Amit, 2010; McGrath 2013).
For firms, the core element of every business model is the value proposition,
and the creation of value is the core purpose of economic exchange. Within a firm’s
network, actors are constantly forming new connections. So, contexts are always in flux
and value experiencing is very dynamic (Vargo, Maglio & Akaka, 2008). Accordingly,
firms can only offer a value proposition as an invitation to engage with the firm for the
co-creation of value. Therefore, the offering of a firm is not embedded with value (value-
in-exchange), but rather value occurs when the offering is useful and usable for the
beneficiary (value-in-use), and this is always in a particular context (value-in-context).
The Service-Dominant Logic focuses on doing something beneficial, instead of
units of output (Nambisan & Lusch, 2015). Service represents the general and universal
case. Goods, then, could be seen as appliances that serve as alternative to direct service
provision. In this actor-to-actor network, service ecosystems become essential in the
search for common organizational structures to facilitate resource integration and service
exchange among those actors. The distinction between ‘service innovation’ and ‘product
innovation’ is perhaps no longer relevant, since from the S-D logic perspective all
product innovations are service innovations. Products are only mechanisms, mediums,
or vehicles for delivering service.
Skålén et al. (2014) encourages managers to collaborate with their customers,
and possible other stakeholders, during the innovation process. Firms should organize
their business models towards the value proposition. In their opinion, firms can serve its
customers better by articulating what can be done for them, what practices can be offered
to them, and how this can benefit them. This study defines a value proposition as “value
creation promises created either by the firm independently or together with customers
and other actors through resource integration based on knowledge and competencies”
(Skålén et al., 2014, p. 8). However, firms often lack an understanding of how to best
coordinate their resources and harness their capabilities to co-create innovations.
3
2.1. Innovation
The Austrian economist Joseph A. Schumpeter defined innovation as “the doing of new
things or the doing of things that are already done, in a new way” (Schumpeter, 1912).
Over more than 100 years later, firms are still struggling with the execution of
innovation. In recent years, firms have not always been able to innovate their portfolio
to lower costs and higher quality, and Christensen (2008) believes that the primary reason
is a lack of business model innovation. Although business model innovations have
reshaped entire industries and redistributed billions of dollars of value, a recent American
Management Association study determined that “no more than 10% of innovation
investment in global companies is focused on developing new business models”
(Johnson et al., 2008, p.16). A short while ago, the business model has been formed as a
new unit of analysis (Zott et al., 2011), where the business model itself can be a subject
of innovation (Mitchell & Coles, 2004). The ongoing focus on innovation and the
introduction of new types of innovation as well in theory as in practice has led to
confusion and partly overlapping terms. This study will focus on, and tries to clarity, this
new type of innovation: Business Model Innovation.
2.2. Corporate Venturing
Organizational design fuels innovation and entrepreneurship (Foss, 2003), and,
nowadays, firms are pursuing corporate venturing as a solution to innovation. For as well
exploration as exploitation, businesses are always engaging in learning and knowledge
search. The way firms search for knowledge to renew their strategies and adapt to their
environments are a central component of the corporate entrepreneurship literature (Juha
Uotila, Markku Maula, Thomas Keil, 2009). These components very well align with the
main points of innovation, that are imply change and renewal for a better situation
(Gundogdu, 2012). Firms use corporate venturing to strive for breakthrough innovations.
These innovations were only intended for firms, due to the very costly and resource-
consuming process. Still, the exploitation of business opportunities needs to be motivated
by expected gains, but the exploration of business opportunities has also become feasible
for start-ups. Either it is within a firm or a start-up, entrepreneurship includes the
evaluation of opportunities, focuses on investments, and execution power (Klein & Foss,
2008). For the author, the essence of entrepreneurship is to match new offerings with
opportunities in the marketplace.
Being intrapreneurial relates to individuals within organizations who pursue
new opportunities, in the spirit of entrepreneurship (Antoncic, Hisrich, Antoncic, &
Hisrich, 2003). Intrapreneurs go beyond multiple conventional limitations and
boundaries, and take on additional risks that other peers would not be prepared to
consider (Carrier, 1994). Despite their efforts, the development of an idea into a
successful innovation requires more than only individual effort. The interplay between
ecosystem, organization, venture unit, venture, and intrapreneur is central to innovation,
yet it might involve conflicting situations if the intrapreneurs’ activities clash with the
organization’s rational models (Russell, 1999). Russell (1999) also argues that it is
necessary to have organizational support systems that provide resources, autonomy, and
emotional support for intrapreneurs. Halme et al. (2012) suggest that intrapreneurs, from
bottom-up, first and foremost need to convince their manager and colleagues, aimed at
internal resource mobilization. This leads to what Steve Blank (2014) considers as ‘Get
Upstairs in the Building’. The extra dimension of an internal venture relative to an
4
external start-up is that internal ventures, next to reaching a product-market fit, also need
to have a venture – organization fit, which is strong, sustained internal support for
successful internal venturing.
Internal corporate venturing means the internal creation of a new business that
resides within the firm’s structure and adds to the existing businesses (Santos & Spector,
2009). Such a view refers to the entrepreneurial act to create a new organization or
instigate renewal or innovation within that organization. The goal of internal corporate
venturing is to implement a profitable new business into a firm. This goal involves not
only the creation of a new-to-the-firm value proposition, but also a new-to-the-firm value
constellation. The research context of this study are internal corporate ventures.
2.3. Business Models
Zott & Amit (2008) link business opportunity, value creation, and business models, as
they see business models design the transaction content, structure, and governance to
create value through the exploitation of business opportunities. Business models
attracted substantial attention in practice, and the attention in academic research is
growing rapidly. This study focuses on business models, and make use of the definition
of Teece (2010): “A business model is the articulation of the logic by which a business
creates and delivers value to customers. Equally important, it also outlines the
architecture of revenues and costs that will, when all goes well, allow the business to
earn a profit”.
Business models can succeed, and fail. Business models on paper could be very
sound, but the extraction of value for the stakeholders starts when being implemented.
Validated business models can be managed badly and fail, just as weak business models
may succeed through strong management and implementation skills (Osterwalder et al.,
2005). The organizational requirements for the implementation of a new business model
must be enacted in order to deliver value to the beneficial. Unfortunately, there is not a
recipe for change for new business models. Really understanding the need for the change
of a business model and then accomplishing is hardly a straightforward process, rather,
it is one that requires strong dynamic capabilities (Teece, 2007).
It is unlikely that exactly the same business models are out there. Although
organisations could have the same customer, the way of creating and delivering value
could differ, as well as the relationship between the actors. Each business model has its
own characteristics, but there are some general aspects, which should be present in every
business model. This study makes use of the business model canvas (Osterwalder &
Pigneur, 2010) as a framework, due to a well-balanced compromise between detail and
abstraction, and it covers the main elements. This framework has gained significant
recognition and is widely used among well-known scholars (Chesbrough, 2010). Such a
framework is essential; otherwise, it remains impossible to
share business models throughout an organization.
Accordingly, the nine components of the business model
canvas used for describing business models in this study are
value proposition, customer segments, customer
relationships, channels, key activities, key resources, key
partners, cost structure, and revenue streams. Proactively or
unsolicited, businesses are constantly transforming, and the
search for new business models is a logic consequence of
these transformations. Figure 1. Business Model Canvas.
5
2.4. Business Model Innovation
New business models, in general, are created through business model innovation.
Business model innovation involves changes around the architecture, including the
elements – Content (“what”), Structure (“how”), and Governance (“who”) – of a business
activity (Zott & Amit, 2010). Quite recently, “business model research shifted from a
rather static perspective of describing business models to a more dynamic perspective of
the design and implementation of business models” (Stampfl, 2016, p.37). Now, business
model innovation is seen as a cross-sectional matter, interconnected with concepts such
as strategy, competitive advantage, dynamic capabilities, resources, and business models
(Beattie & Smith, 2013). Casadesus-Masanell & Zhu (2013, p.464) describe the essence
of business model innovation as; “At root, business model innovation refers to the search
for new logics of the firm and new ways to create and capture value for its stakeholders;
it focuses primarily on finding new ways to generate revenues and define value
propositions for customers, suppliers, and partners”.
As business model innovation refers to the search for new logics of the firm,
often the degree of novelty of business models is quite high. Literature distinguish three
different degrees of novelty for business models, namely; (1) Business model is new-to-
the-world, (2) Business model is new-to-the-industry/market, and (3) Business model is
new-to-the-firm (Stampfl, 2016). Research shows that new-to-the-world business
models have become a comparatively rare species (Stampfl, 2016). According to
Gassmann, Csik, et al. (2012) around 90% of new business models are rooted in either a
relocation of successful patterns, an adoption of an existing business model, or a
combination of at least two existing business models. The least attention of business
model innovation research has put into new-to-the-firm business models, as on an
abstract level expected is that in probably most cases this type is not sufficient enough
in creating sustainable competitive advantage. Moreover, there is not yet evidence to
support this claim, and none of those studies were conducted in an empirical setting. As
this research will be conducted in the context of a firm, in an empirical setting on a
venture level, the focus will be on new-to-the-firm business models.
Although business model innovation receives sufficient attention in academia,
the triggers to start with a business model innovation are still underexplored. Business
model innovations could come from different sources, and can be triggered in various
ways. Comes & Berniker (2008) only discriminates internal and external factors, where
Bucherer, Eisert, & Gassmann (2012) suggest a distinction between ‘threats’ and
‘opportunities’. Where a threat describes “a situation in which a company is forced to
innovate its business model” and an opportunity describes “a situation where a company
innovates to capture an opportunity” (Bucherer et al., 2012, p. 189). Next to these abstract
differentiations, business model innovations could also be triggered by concrete
elements, such as another distribution method, slightly changing value proposition, or an
internal culture program that require a process change. These reasons to start could act
separately, or could come simultaneously, and often relate to one of the business model
components. Additionally, that one side only triggers innovations is debatable.
Regardless of the trigger, new technologies must be linked to market needs, which is
crucial for innovation (O’Connor & Rice, 2001). This study will research the triggers for
business model innovation, to help enrich this topic in literature.
In practice, business model innovation does not follow a strictly sequential
procedure. In literature, there is no consensus about which procedure to follow; all
proposed procedures are still fuzzy. Nevertheless, an aspect that is frequently discussed
6
is the iterative character of business model innovation. As Sosna, Trevinyo-Rodriguez,
& Velamuri (2010) describe that the design of business models and the implementation
of business models are more parallel than chronological processes. In their recent study,
Stampfl, Prügl, & Osterloh (2013) found that entrepreneurs differentiate between
business model conceptualization and business model realization. Whereas
conceptualization relates to creating a business model, realization describes the
deployment of a business model. This distinction reflects the prominent notion in
innovation management research regarding firms engaging in opportunity “exploration”
and “exploitation” (Andriopoulos & Lewis, 2009; Tushman & O’Reilly, 1996).
Consequently, a separation between the creation of business models and the deployment
of business models is used to structure this study.
In the past years, researchers tried to define the process of business model
innovation. Also described above, the most important consensus is that the progression
of teams was highly complex and non-sequential. Teams iterate back and forth. Stampfl
(2016) proposed three stages in the process of business model innovation; sensebreaking,
sensegiving and freezing, which are somehow related to a starting point,
conceptualization, and realization. Stampfl (2016) efforts combine the strategic aspects
of business model creation, as well as the operational aspects of business model
deployment. These abstract distinctions are difficult to translate into practice. Therefore,
this study aims to explore multiple stages in an empirical setting to give guidance to
teams working on a business model innovation.
The organizational dimension of business models, which is an increasing area
of interest (Leih, Linden, & Teece, 2014), is that business models are the architecture
that links value creation and value capture mechanisms in a business. Generally, a
business model imply various aspects of an organizational structure that results in value
being created, captured, delivered, and monitored (Leih et al., 2014). Next to the
organizational level of business model innovation, Stampfl (2016) studied the individual
level of business model innovation, which focuses on individual tasks to create a new
business model. The organization itself, its strategy, and its environment primarily
influence the organizational level of business model innovation. This study focuses on
the latter.
2.5. Dynamic Capability of Business Model Innovation
Dynamic capabilities of a firm facilitate in the pursuit of evolutionary fitness (Helfat et
al. 2007:7). Strong dynamic capabilities depend not only on the capacities of
entrepreneurial managers, but it also help to organize supporting routines and enable
firms to coordinate their resources effectively (Klein & Foss, 2008). Leih et al. (2014)
explain that dynamic capabilities encompass entrepreneurial activities within firms.
First, by recognizing the need to change the existing business model, and in the second
place, by accessing and orchestrating the necessary assets in the pursuit of new value
creation. To do so, dynamic capabilities also determine the firm’s agility in implementing
the new organizational processes, including the alignment of new and existing activities.
In addition, they are able to respond to the unexpected internal and external contingencies
that unavoidably accompany the creation and deployment of a new business model.
Summarily, dynamic capabilities enable firms to identify and orchestrate the essential
resources for designing and implementing a business model (Teece, 2007).
The dynamic capabilities view has been widely used in product and technology-
related contexts, but less in the context of business model innovation, even though it also
7
seems particularly useful for this type of innovation (Kindström, Kowalkowski, &
Sandberg, 2013). However, the development of dynamic capabilities relies on
organizational structure, culture, people and processes, which is a challenging task to
execute (O’Reilly & Tushman, 2008). So, firms need support in operationalizing
dynamic capabilities, to fully reap the benefits of future business model innovation
(Fischer, Gebauer, Gregory, Ren, & Fleisch, 2010). In a way, dynamic capabilities are
foundational to business model innovation, as they may enable a firm to sense and seize
necessary changes in a business model. So, fundamentally, “dynamic capabilities are
high-order capabilities that an organization uses to shape and orchestrate its resource
base to meet the current and anticipated needs of the market” (Leih et al., 2014, p.3).
Such capabilities involve the whole organization, but they also reside at the level of
senior management. Dynamic capabilities are enabling firms to create and deploy
business models, and re-structuring the firm facilitates strengthening these dynamic
capabilities. Ultimately, it is by exercising the dynamic capabilities that a firm could
organize itself to deliver value to the customer while capturing sufficient value for itself
to be viable. This study focuses on uncovering the dynamic capabilities, which enable
business model innovation.
2.6. Summary
To sum things up, the pressure to innovate is constantly rising, and firms start exploring
an alternative strategy to generate revenue: business model innovation. Besides practice,
academia is increasingly paying attention to this phenomenon. There must be a need for
a new business model, which act as a trigger to start with business model innovation. In
literature, business model innovation is roughly divided into a creation phase and a
deployment phase of a new business model. Dynamic capabilities enable firms to create
and deploy new-to-the-firm business
models. See Appendix A for an
overview of the literature review of
business model innovation. See Figure
2 for the conceptual model and Table 1
for an overview of the conceptual
model constructed based on the
literature review.
Figure 2. Conceptual Model
Table 1. Overview of the Conceptual Model constructed based on the Literature Review
Business Model Innovation Phases Important Aspects in each Phase
Trigger Internally and Externally (Comes & Berniker, 2008).
As Threat or Opportunity (Bucherer, Eisert, & Gassmann, 2012).
Business Model Creation Strong Management Capability (Osterwalder et al., 2005). Iterative Development (Sosna, Trevinyo-Rodriguez, & Velamuri, 2010).
Autonomous Development (Russell, 1999).
Business Model Deployment Emotional Support (Russell, 1999). Implementation Skills (Osterwalder et al., 2005).
Organizational support system provide resources (Russell, 1999).
8
3. Research Method
When evaluating what would be the most appropriate methodology to use in this study,
the author considered the applicability of a case study. According to the author, a case
study is “an empirical inquiry that investigates a contemporary phenomenon within its
real-life context, especially when the boundaries between object of study and context are
not clearly evident” (Yin, 2003:13-14). Hence, considering the typology of this study
and yet the unclear relation between dynamic capabilities and business model innovation,
a case study has been evaluated as the most appropriate. In addition, Yin (2003) mentions
to use a case study when the researcher has little to control the events within the real-life
context, where the real-life context of this study is an operating firm. Moreover, as there
is limited research on the relation between dynamic capabilities and business model
innovation, case studies are necessary to study this complex social phenomenon. The
study’s theoretical proposition is to uncover the dynamic capabilities that enable the
creation and deployment of new business models within internal corporate ventures,
which makes business model innovation within internal corporate ventures the study’s
unit of analysis. This study can be considered exploratory, because the focus is on
gaining insights to recognize patterns that can be derived from the theoretical
proposition, aimed at revealing the impact of business model innovation that has not yet
clear evaluated outcomes and effects (Yin, 2003).
Further, to enrich academia on the topic of business model innovation, theory
will be developed by relying on both deductive and inductive approaches. The author
relied on previous literature resulting in a conceptual model highlighting the potential of
dynamic capabilities for business model innovation, using the deductive approach. On
the other hand, the inductive approach was used to amplify the literature-based
conceptual model by depending on insights from the gathered data, allowing a revision
of the initial conceptual model.
3.1. Case Selection
The empirical setting of this study, the Philips Research organization, allowed analyzing
multiple cases to generate insights about the concept of business model innovation in
practice. Philips Research has been evaluated to be suitable for this study considering its
continuous innovation efforts, for which the Eindhoven Lab, the core lab of Philips
Research, is awarded the Open Innovation 2.0 Award from the European Union in 2016
in recognition of its role in creating the High Tech Campus as a vibrant innovation
ecosystem (Philips, 2016). At Philips, innovation efforts are aligned with the business
strategy, where Philips Research investigates trends and creates concepts for solutions
within strategic Philips domains linked to societal challenges. Aiming to improve
people’s lives through technology-enabled meaningful innovations, Philips Research
focuses on the exploration of new technologies and business ideas, delivering proofs-of-
concept, particularly for first-of-a-kind products and services (Philips, 2016). Philips
Research is well acknowledged for its high innovation performance, visible in the many
commercially successful innovations, such as radios, televisions, and medical equipment
(Philips, 2016). These technology-enabled meaningful innovations show the
development of new technologies that are fundamental for the long-term, as well as the
exploratory activities to supply the Philips’ business units with the newest technology
generation. These technologies are increasingly being developed within internal
corporate ventures. When mature enough, these technologies are transferred to the
9
business units. Very focused on technology innovation, management of Philips Research
started to recognize business model innovation as another way to develop technology-
enabled meaningful innovations. While, the key performance indicators of Philips
Research are still based on the technology transfer to Philips’ business units.
This study was possible to be conducted due to following an internship, which
has facilitated data collection and allowed the author to familiarize himself with business
model innovation within the context of the firm.
3.2. Sample Selection
To get a broad understanding of the concept of business model innovation within internal
corporate ventures, the author decided to interview people from three different roles
within Philips Research. These roles are venture leads, innovation officers, and senior
management. Senior management bears responsibility for internal corporate ventures,
from incubation until the transfer to a business unit, or by stopping the provision of
resources. Senior management is accountable for the allocation of the time, and thereby
budget, of employees. Innovation officers support internal corporate ventures by
deploying their expertise. Furthermore, venture leads are managing internal corporate
ventures. Venture leads are mostly the idea creators of a research project turned into the
general manager of an internal corporate venture. The identification of these three
relevant roles became evident after the author familiarized himself with the way of new
business creation within Philips Research. After multiple informal and non-recorded
meetings with employees of Philips Research, the author had gathered relevant insights
of the governance of the firm, permitting a better capture of the researched phenomena.
For the recruitment of these three roles as interviewees, the author relied on
purposive sampling rather than probability sampling, to choose interviewees on the
relevance of the information they can provide. For the preparation of the interviews, the
author conducted a content analysis, an approach to the analysis of documents and texts
that seeks to quantify content in terms of predetermined categories and in a systematic
and replicable manner (Bryman, 2012:290). This analysis acquainted the author with the
research topic, and the similarities and differences between internal corporate ventures
helped to sharpen the interview guide.
This study has a sample of six cases of internal
corporate ventures, which are spread out well over the
creation phase and the deployment phase, see Figure 3.
Moreover, see Table 2, for the total amount of
interviewees in this study. There is an exception,
because one case, ICV 3, stopped just before this study.
This case is part of this study, because there could still
be learnings from their ending, as well as their progress
in the creation and the deployment phase.
Table 2. Quantitative details of
Interview data
Role Total
Senior
Management
4
Innovation Officer 4
Venture Lead 6
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Figure 3. Cases of Internal Corporate Ventures
3.3. Data Collection
Before actually starting with data collection the ICBE, an internal committee responsible
for approving any type of data collection within Philips Research, had to approve this
study. Therefore, according to Philips Research’s requirements, data collection of this
study emphasized the protection of the identity of interviewees through confidentiality
and anonymity procedures. To formalize such, each interviewee signed a letter of consent
to approve the usage of a Philips recording device. Additionally, after transcribing the
interviews the author immediately deleted the audio recordings.
As of the research data, recorded semi-structured interviews were conducted.
The author had a series of prepared questions from the interview guide, but, at the same
time, was also able to vary the sequence of the questions (Bryman, 2012). All interviews
were conducted with only one interviewee, and took place in a face-to-face meeting at
High Tech Campus in Eindhoven. The author allowed himself to learn from the
circumstances of the interviews, and therefore made adjustments to the interview guides.
See Appendix B for the specific interview guides for the three different roles, and
Appendix C for the interviewee labels.
3.4. Data Analysis
The author transformed the recordings of the semi-structured interviews into literal
interview transcriptions. The author removed names, roles, background, and other
confidential information from the transcripts to guarantee anonymity of all interviewees.
The interview transcriptions were input to conduct a systematic method of interpretation
of the primary data (Saunders, Lewis & Thornhill, 2016). The data analysis approach
grounded theory methodology has been used to systematically analyze the gathered data.
This prominent iteratively approach is concerned with the development of theory out of
the gathered data (Bryman, 2012). The methodology consists of four phases: open
coding, axial coding, theoretical saturation, and selected coding. Open coding, or initial
coding, driven by reducing primary raw data, allowed the author to classify first-order
codes out of raw data. Due to the astounding large amount of first order codes, categories
were allocated considering a holistic analysis rather than relying on independent
fragments of texts. As the research progressed, Grounded theory’ axial coding enabled
identification of patterns, based on similarities and differences among categories.
Moreover, axial coding allowed extracting the most relevant themes to answer the main
11
research question. These second-order themes were naturally created, and either linked
to the creation or the deployment phase. From this point on, data is segmented per theme,
as can be seen in Appendix G. Selected coding creates an abstraction of axial coding
where ‘the result should be one central category and one central phenomenon’ (Flick,
2009:312). When iteratively reached theoretical saturation, selected coding allowed
defining two abstract theoretical dimensions, namely ‘Foundational Aspects for
Dynamic Capabilities to enable New-to-the-Firm Business Models’ and ‘Dynamic
Capabilities that enable New-to-the-Firm Business Models’, both for the creation and the
deployment phase. The conception of these aggregated theoretical dimensions is the
assembling of themes from the second order analysis. These second-order themes
derived from the raw primary first-order codes, which describe the observed
phenomenon. See Figure 4 and Figure 5 for an overview of the data coding structure for
both the creation and deployment phase.
Figure 4. Overview of Data Coding Structure for the Creation Phase of New-to-the-Firm Business Models
Figure 5. Overview of Data Coding Structure for the Deployment Phase of New-to-the-Firm Business
Models
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4. Research Findings
This chapter covers the relevant research findings of the conducted interviews. The
chapter is branched into two sections, one relates to the creation phase, and the other one
relates to the deployment phase. Both sections are separated due to the two aggregated
theoretical dimensions, which are ‘Foundational aspects for dynamic capabilities to
enable new-to-the-firm business models’ and ‘Dynamic capabilities that enable new-to-
the-firm business models’. At last, both sections will end with a summary.
4.1. Creation Phase
In the data coding structure, the trigger to start business model innovation is integrated
within the creation phase of new business models. From the interviews, it became clear
that business model innovations do not have a clear starting point, nor clear factors
affecting a trigger, nor a carved in stone procedure to follow. Due to this fluid character
of the trigger of business model innovation, it could actually start anytime, so, it is
described as part of the creation phase of a new business model.
4.1.1. Foundational Aspects for Dynamic Capabilities to enable New-to-the-Firm Business Models
Rescue for Firm’s Survival. The necessity of business model innovation is clear, as
senior management, innovation officers and venture leads are mentioning it as the way
to survive as a firm. According to a venture lead the world is rapidly changing, which
demands a new type of innovation of firms to transform its resource base to meet current
and future expectations. The interviewees have thus confirmed that business model
innovation is essential, and, thereby, is the survival method for firms. See Table 3 for the
full data display of Rescue for Firm’s Survival.
Table 3. Data Display of Rescue for Firm’s Survival
First-Order Codes “We have to do it, otherwise you will not survive, and then we won’t be here anymore in five years from
now”. (Senior Management)
“We would like to survive as a company. We still want to be there in another 120 years from now”.
(Innovation Officer)
“I think it is very important. The changing world is demanding this change; we need to follow as Philips”.
(Venture Lead)
Psychological Barrier to Start. Firms efficiently organize themselves towards their
dominant execution model. Therefore, the creation of a new business model is not even
in the frame of reference of employees. Accordingly, an innovation officer experiences
that the mindset to see, and execute, new business models is the biggest barrier to start
with business model innovation. The thoughts of employees are fully anchored in the
current business model, as it is the way they work. It is so deep in the minds of the firm,
that experimenting with business model innovation should be in a small group relatively
autonomous from the current business model. See Table 4 for the full data display of
Psychological Barrier to Start.
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Table 4. Data Display of Psychological Barrier to Start
First-Order Codes “Within our firm, we have a dominant execution model. This is fully efficient in line with our current
business model, so a new business model is not even in your frame of reference. That is logical; the business
model is the way of working for you. If you try to experiment with other business models, it must be in a small group, and organization wise relatively autonomous from the current business model. We are calling
ourselves separated, but not isolated”. (Venture Lead)
“Philips recognized that it is very difficult if you have a dominant business model, to create another one
next to it. It is so deep in the minds of the employees that it is hard to move your thoughts to another model,
not even speaking about creating one. Fully anchored in our current model”. (Venture Lead)
“The mindset to see, and execute new business models is the biggest barrier”. (Innovation Officer)
4.1.2. Dynamic Capabilities that enable New-to-the-Firm Business Models
Business Model Trigger from Problem-based Value Proposition. A business model
innovation establishes a ‘new’ business model, where the new business model starts with
a value proposition. According to senior management, these possible offerings all start
with which problem they are solving, and for whom. When ventures mostly found a
problem – solution fit of their ideas, they start to discover the customer need to build
upon a value proposition. An innovation officer shared an experience of a value
proposition that was completely new to the firm, resulting in a yet unclear understanding
of the needs of potential customers. The crux is in exploring multiple value propositions
with all kinds of stakeholders. Essentially the trigger, neither initiated internal or
external, of a business model innovation is the need for a ‘new’ business model, because
the (venture of the) firm sees opportunities where the firm has not been yet. Obviously,
this is not the case when a traditional business model fits the value proposition. See Table
5 for the full data display of Business Model Trigger from Problem-based Value
Proposition.
Table 5. Data Display of Business Model Trigger from Problem-based Value Propositions
First-Order Codes “It all starts with which problem you are solving, and for whom”. (Senior Management)
“That is a beautiful value proposition, but how does this work as a business”? (Innovation Officer)
“You can start with BMI at any time. There only must be a need. Whether you are exploring a new idea, or
jump upon a certain need in the market, you have to create a new business model, if that is not the traditional
business model”. (Innovation Officer)
“If there is no need for a new business model, please do not work on it. Therefore, you need a value
proposition that sees directions where the company has not been yet. And of course, a value proposition is based upon a customer need”. (Innovation Officer)
“To start with a business model innovation, you have to think of a problem you would like to solve, and the value for the different stakeholders. If you start early with this kind of thinking, you faster discover the real-
world problem. For sure in the context of venturing, business models push to think in solutions. But, still
the bases is a problem”. (Senior Management)
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BMI is not a Process, but has Maturity Levels. As explained in ‘Business Model
Trigger from Problem-based Value Proposition’, a business model innovation starts with
reaching problem – solution fit. According to a venture lead, after reaching problem –
solution fit co-development of a value proposition with the eco-system starts. During this
maturity level, multiple value propositions are being created and validated until a value
proposition – ecosystem fit is reached. Then, extend a value proposition with a business
model, preferably numerous business model options. In this fuzzy level, venture leads
distil control points, which act as key performance indicators using a business model
dashboard, and should help to decide which business model(s) is most appropriate to
pilot. Once the team has confidence that potential customers intend to pilot the business
model, the business model – potential customers fit is reached. Although the timeline
really depends on the market, the proposition, and the business model there are roughly
three key metrics. According to an innovation officer, a business model allows getting
the first traction from customers, growth of the amount of customers, and, then,
converting into a profitable business. The maturity levels should not be confused with
the multiple (9) components of a business model, explained in the business model canvas
of Osterwalder & Pigneur (2005). See Table 6 for the full data display of BMI is not a
Process, but has Maturity Levels.
Table 6. Data Display of BMI is not a Process, but has Maturity Levels
First-Order Codes “You always start with ideation, than making choices, creating stuff, and validate. This very iterative
process ends with a fit for your proposition, then pilot, and scale. Therefore, you are always iteratively busy with refinements of your business model”. (Innovation Officer)
“From the different business models you are thinking about, and discussing with your ecosystem, you’re distilling control points to decide which business models are most appropriate to test”. (Venture Lead)
“Our business model is alive, it is transforming when we are learning. To manage this, we have a dashboard per different stage. You need to know that you are fixing a problem, that your customers are willing to pay
for your solution, and that is fits the firm’s strategy”. (Venture Lead)
“First traction from customers, growth of amount of customers, and then convert to a profitable business.
The timeline really depends on the proposition, market, and business model”. (Innovation Officer)
“You have to find ecosystem partners, which are enthusiastic about your technology, and together bring it
to a new maturity level. We are talking about co-development with your eco-system”. (Venture Lead)
Clear Milestones for Autonomous Development. Giving people relatively clear
deliverables about what to expect, is already a stimulating incentive. Venture leads
appreciate setting clear milestones for their venture working on a business model
innovation, according to innovation officers. When a team is not able to reach these
milestones, they should be willing to shut down the project by themselves. Senior
management emphasizes that business model innovations should be given autonomy, as
well as having access to resources. Otherwise, teams are slowed down, which could mean
slowly killing the business model innovation. Senior management should also get the
right conditions in place, and identify the right people to execute this very tough
assignment. Not only senior management, but also the team should expect results, but do
not evaluate these results on the short term, because a new business model, within the
context of an internal corporate venture, is generally not profitable yet. Ultimately, clear
milestones should provide autonomy and focus. See Table 7 for the full data display of
Clear Milestones for Autonomous Development.
15
Table 7. Data Display of Clear Milestones for Autonomous Development
First-Order Codes “Because you’re working within Philips, you need to take into account the brand awareness. On the other
side, you need to have some flexibility to test your product”. (Innovation Officer)
“Focus helps to accelerate”. (Innovation Officer)
“A venture needs to have some space, to work towards their long-term goal. Venture does need to show
results, but you cannot evaluate it on the short term, while a business, in first instance, is evaluated on the
short term. (Innovation Officer)
“Giving people relatively clear deliverables about what do you have to present, and then we will decide
whether you will continue or not. Is already of great help”. (Innovation Officer)
“Setting milestones for a venture is being appreciated, to work towards something”. (Innovation Officer)
“As a team, we have set clear milestones, and when we do not reach these, we would like to shut down the project by ourselves”. (Venture Lead)
“Give it autonomy, give it access to resources. But, do not control it too much. You know, when you start controlling, and when you start demanding things which you not need to demand for, you start slowly killing
it, and slowing it down. And, when you start to slow down a venture, and making the speed too depend on
decisions made elsewhere in the business, then the whole purpose is lost. So, we need to set up the right conditions, and identify the right people to lead it. Make it something that is aspirational, and a new way
for Philips to drive breakthrough innovation”. (Senior Management)
Business Model Roadmap. When entering the stage to create a business model for a
value proposition, teams have already thought of multiple ideas for their technology. If
teams have a vision on their product roadmap, then they should as well have a business
model roadmap, according to an innovation officer. A business model roadmap
facilitates creativity to come up with multiple business model options, not only in the
short-term, but also in the long-term. A product or service roadmap and a business model
roadmap should enrich each other. Continuously track all assumptions of business
models of the business model roadmap, via possibly a business model dashboard. An
innovation officer mentioned when having a business model roadmap for a business
model innovation; it automatically let teams think of scalability, and the necessary
enablers. Then, the creation of a business model roadmap, with multiple business model
options makes sense. The business model roadmap, plotted against the different fits and
time, will further guide teams through the deployment phase. See Table 8 for the full
data display of Business Model Roadmap.
Table 8. Data Display of Business Model Roadmap
First-Order Codes “If you have a vision of your product roadmap, then you should also have a business model roadmap”.
(Innovation Officer)
“You need to have a business model roadmap. Have one vision, integrate customers in this journey, and
test multiple business models. Not just in the short-term, but also long-term. You will develop a path, and
probably hit some barriers. It is a search, but like the roadmap of your product or service, they need to enrich each other”. (Innovation Officer)
“Continuously looking to your dashboard, where are you at validating your business model? How can we be sure that we are on the right track? Actually, you need your dashboard always somewhere around you”.
(Innovation Officer)
16
“Fully focus on making your biggest assumptions explicit, and then test them. Instead of making a plan,
and evaluate after three years. More lean way of working; that is an important method change. Within
Philips, it then becomes much more experimentation. Also, a mindset change; really think in another way about what you are doing, how you are working. Not starting with a big pilot, or a huge research. But, if
this is going to sell, what are then the big problems”. (Venture Lead)
“If you’re thinking about a roadmap, then you automatically think of scale. What if we sell 100 or 10 million
pieces, what is the difference? You need to think of scalability, and which enablers does support this”.
(Innovation Officer)
“To summarize; make all assumptions explicit. Assumptions from the management, as from the team. Then
prioritize, and then test. With your team then interpret whether you believe these assumptions are really validated”. (Venture Lead)
4.1.3. Summary of the Findings of the Creation Phase of Business Model Innovation
Although, the necessity of business model innovation is clear, thinking of and executing
on new business models is the biggest psychological barrier. These foundational aspects
could enable a problem-based value proposition to go through multiple maturity levels,
with the right form of autonomy, provided the right resources, following a business
model roadmap. For the full summary of the findings of the creation phase, see Appendix
D.
4.2. Deployment Phase
The creation phase of a business model innovation must be fully run through, in order to
reach the deployment phase, by having the business model – potential customers fit.
Essentially, this means having a team and a validated new-to-the-firm business model,
where senior management has the confidence it will transform into a profitable business.
These new-to-the-firm business models will obviously run into organizational barriers,
also called the anti-bodies of the firm. This section will explain how to best cope with
these barriers, by providing findings of dynamic capabilities that enable new-to-the-firm
business models in the deployment phase.
4.2.1. Foundational Aspects for Dynamic Capabilities to enable New-to-the-Firm Business Models
Implementation of Business Models. According to a venture lead: “The real problems
do not show up in the value proposition”. Meaning that there are always innovators
willing to help, but really implementing a business model to provide the value to the
customers is the toughest job. An observation of the interviewees is that actually
implementing a new business model in an organization to enable the offering is a very
hard task to do in a firm. These business models are new-to-the-firm, and, thereby, hard
to get a full overview of the consequences. A venture lead elaborated that a team does
not want to hit an anti-body of the firm when they are trying to implement a new business
model, which implies a new operational way of working for the firm. To experience the
least resistance, be transparent from the start, and thereby avoid an immune response of
the firm. The big crux is managing the change within the firm, so the team should not
only be busy with selling the proposition to the intended customer, but also to the firm.
In addition, once the firm settle with a business model, the moment the implementation
is fixed, again, it is difficult to change. See Table 9 for the full data display of
Implementation of Business Models.
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Table 9. Data Display of Implementation of Business Models
First-Order Codes “The key message; if you would like to implement new business model, you need to carefully think about
the operations as well. The real problems do not show up in the value proposition. And if you face problems
in the scaling part, the costs will be very high”. (Venture Lead)
“You could quite well figure out if customers are willing to pay for your proposition, but you need to enable
this offer by implementing the business model in your organization. That is a very hard task to do in a firm”.
(Venture Lead)
“Some ventures have propositions which are completely new to Philips. No experience at all. These ones get tough, hard to get an overview. Suddenly, you need to pick the right people with the right expertise, as
well from the operations. They are not there yet. Then you end up with having a nice proposition, and
then...” (Venture Lead)
“As a venture, you sometimes do things in another way instead of the standard procedures. You have to be
transparent about this, but still, sometimes you get an immune response, the anti-bodies of the firm that start working. Which is ok, but then you have to manage this change project, that’s the big crux”. (Venture Lead)
“The operational way of working will completely change, if you would like to implement this venture well”. (Venture Lead)
“If we are not able to send an invoice every month, due to our subscription model, our systems weren’t build for that, if you can not even organize that, then you will have a lot more barriers”. (Venture Lead)
“So, I think we had more difficulty with selling it to Philips, instead of to our customers”. (Venture Lead)
4.2.2. Dynamic Capabilities that enable New-to-the-Firm Business Models
Dynamic Team Competencies. The innovation officers and venture leads unanimously
agree with the importance of a diverse set of team competencies. Even an innovation
officer mentioned that the entrepreneur / venture lead is the most crucial factor for
success. Having a strong dedicated core team is of vital importance for continuity. The
experience is that changing roles for the different stages of a business model innovation
works stimulating, but also keep in mind that changing roles too quickly decreases the
knowledge of the past journey. An innovation officer state that for the different stages,
the team need to have various team competencies. Exploring a business model, and
implementing one are different assignments, so do not use the same people in every
stage. See Table 10 for the full data display of Dynamic Team Competencies.
Table 10. Data Display of Dynamic Team Competencies
First-Order Codes “You need to change the team during the stages. Do not use the same people in every stage”. (Innovation
Officer)
“Continuity in a venture is of vital importance. The danger of a big organization, that people are being
exchanged too rapidly. You need to have the same people in the core, changing from roles is just
stimulating”. (Innovation Officer)
“They will work for the vision, together in a team”. (Venture Lead)
“A new business model needs discipline, stamina, strong management skills, otherwise it is not going to
work”. (Innovation Officer)
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De-Risking Business Models. The interviewees observe that business model innovation
leads a firm into areas where it has not been before. An innovation officer calculates this
as a lot of risk, which translates into losing money for the firm. Senior management only
want the strongest ones to go to the next maturity level, which evidently requires more
funding. That is why within business model innovation it makes sense to build in barriers.
The interviewees determine such a barrier, by measuring the risk of a proposition, and
associated business model. They mention that testing and validating with (potential)
customers is the most reliable method to de-risk, which should be a basis for the barriers.
See Table 11 for the full data display of De-Risking Business Models.
Table 11. Data Display of De-Risking Business Models
First-Order Codes “In business model innovation, very often you are going into an area where you have not been before. So, there is a lot of risk you are taking. Risk, which translates into losing money. That is why a heavier process
makes sense”. (Innovation Officer)
“We have built in barriers, because every stage gate is a barrier. Because we only want the strongest one to
come to the next stage”. (Innovation Officer)
“Well, it was basically largely working with customers, from very early on. Or potential customers I should
say. So checking if your current business model is still correct and appropriate and the most efficient one”.
(Innovation Officer)
“And those people already committed to buy the first product. They will be lead customers, which we will gradually expand with new customers. With those launching customers, we have reviewed multiple
business models”. (Venture Lead)
“We are going to launch in October that is the utmost important moment, when we really start selling”.
(Venture Lead)
Specific Resources for Business Model Innovations. Previously, it became clear that
a team needs other competencies in every maturity level. Every maturity level has other
challenges, which also require different resources and capabilities. An innovation officer
mentions that ventures should be very focused on bringing a new business model to
market, and should not be loaded with people from supporting departments, such as IT,
Legal, Finance or Quality & Regulations. Moreover, every business model is unlike any
other, and all require different support. According to an innovation officer, this means
organizing a non-standardized way of facilitating a business model innovation with their
requested needs. Hereby, dynamic capabilities could help by providing resources
specifically tailored to business model innovations, such as a rapid prototyping teams for
business models. An innovation officer indicate that from the start the most important
for a team is to talk to the outside world, which is not a process of approval, but is an
issue of trust. See Table 12 for the full data display of Specific Resources for Business
Model Innovations.
Table 12. Data Display of Specific Resources for Business Model Innovations
First-Order Codes “Keep track of the vision, but attract different capabilities in every stage”. (Innovation Officer)
“A proposition that is new for Philips, is always hard push through. My recommendations are centered
towards the capabilities we need for such propositions, which are new to Philips. A lot of supporting
resources are not thinking in that way, so you need to start the discussion as early as possible, and visualize
where the story could end. Create a framework, but do play within this framework”. (Venture Lead)
19
“Ventures should be very focused on bringing that innovation to market, and making money out of it.
Should not be really loaded with foundational services. That is Q&R, Legal, IT, Finance. We created a
venture capability platform which have all these elements, and we provide them to all different ventures”. (Innovation Officer)
“There are a lot of experts within Philips, content experts; which know a lot about a subject or they have done the job already. Or legal, privacy and security. Most of the times it is the job of these people, which
you, as a venture, could perfectly use. That was of great help”! (Venture Lead)
“The validation phase of new business models is organized per venture. We could organize, or facilitate,
this more centrally. For example, have a rapid prototyping team for business models. We could add extra
capabilities to support ventures”. (Innovation Officer)
“Approval for your venture to talk with the outside world, to start interacting, is the most important. It is not a process; it is an issue of trust”. (Innovation Officer)
4.2.3. Summary of the Findings of the Deployment Phase of Business Model Innovation
After the creation of a new business model, it is time for the toughest task of business
model innovation, the actual implementation of the new business model. This change
must be managed transparently, both to the customers as for the mother firm. For the
implementation of a new business model, an enabler is having a diverse set of team
competencies per maturity level. Still, retain the dedicated core team, and strengthen
them with the necessary expertise per maturity level. Keep the team focused on bringing
the new business model to the market, and as a firm organize specific resources tailored
for those business model innovations. In collaboration of team and senior management,
measure the amount of risk of a proposition, and associated business model. Interviewees
agreed that the most reliable method to reduce risk of a business model is to test and
validate it with (potential) customers. For the full summary of the findings of the
deployment phase, see Appendix E.
5. Conclusion
This section will present a conclusion of the findings, by contrasting the research findings
with existing theory. Following the inductive approach, a new conceptual model will be
presented, to clarify how the findings of this study relate to the relevant body of literature.
This section is structured through a distinction, using the work of Stampfl et al. (2013),
of the creation and the deployment of new-to-the-firm business models. For all
conclusions of this study’s findings contrasted with the conceptual model based on the
literature review, see Appendix F.
Before an extensively outline of both phases, an overall finding may be
concluded, as it influences both phases. The empirical evidence for the theoretical
assumption of the main research question, whether a business model is in the creation
phase or in the deployment phase, is that generally dynamic capabilities enable new-to-
the-firm business models within internal corporate ventures. Even some resources are
supporting a business model innovation in both the creation and deployment phase, such
as a business model roadmap. These resources are often related to a component of the
business model canvas (Osterwalder et al., 2005). In most cases, resources specifically
tailored for business model innovations could accelerate new business models in both
phases, and should look like adaptive building blocks, such as finance support, design
skills, or legal support.
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5.1. The Creation of New-to-the-Firm Business Models
This study investigated the trigger to start with business model innovation. According to
Comes & Berniker (2008) there are internal and external triggers, where Bucherer, Eisert,
& Gassmann (2012) made the distinction between a situation in which a company is
forced to innovate its business model and a situation where a company innovates to
capture an opportunity. This study found a more concrete combination between those
two, in which the external trigger is a customer need, and the internal trigger is an
internally developed technology within a research and development department. The link
between those two, discovered in this study, is a problem-based value proposition, which
is hard to label as a threat or opportunity, due to multiple (personal) perspectives on value
propositions. Senior management, innovation officers, and venture leads all agree that
business model innovation could function as the rescue for firm’s survival, where the
trigger to start with business model innovation could be transformed from an external
threat towards an internal opportunity. This study also show empirical evidence that the
necessity of business model innovation is clear, however when a firm has identified a
business opportunity, there is still a psychological barrier to start execution. Business
model innovation has the potential to rigorously change structures of a firm. When this
occurs, in a specific and concrete manner, employees are not only confronted with a new
business model, but also their personal hurdle. The mental frame of the dominant
execution model based on the current business model explains this logical impediment.
Furthermore, this study investigated the stages of a business model innovation.
Literature often describe business model innovation as a process with multiple stages.
Stampfl (2016) denoted his dissertation ‘The Process of Business Model Innovation’ to
the process-perspective of business model innovation. Although, this study found
empirical evidence that business model innovation occurs over time, it rather has
multiple maturity levels with clear fits between the market environment and the business
model. Senior management truly stressed that a business model innovation could only
progress to the next maturity level when an explicit problem – solution fit has been
reached. An in-depth analysis of the intended value network will help towards a value
proposition – ecosystem fit, which empower thinking of the broader context of a value
proposition: the business model. In line with Sosna et al. (2010), in an iterative way, the
team co-creates forward towards the next consecutive maturity level, namely the
business model – potential customer fit. Potential customer, because this level is all about
learning, validating, and adjusting the business model. This study found that this level
should be lived as intense as needed, so far until the team has the confidence to pilot their
first minimum viable business model.
Teams working on a business model innovation, in this separated, but not
isolated journey from the firm, always have a form of autonomy. This study shows clear
empirical evidence for some kind of autonomy to develop a business model innovation
within the context of an internal corporate venture. The essence is the balance between
leveraging dynamic capabilities of the firm, later more thoroughly explained, and the
search for new logics in the market to reach the consecutive fits. There should be a
transparent discussion about this balance, between senior management and venture leads,
throughout the maturity levels and associated milestones. Then, this relationship is able
to enable and support a business model innovation, when having set the right conditions
and clear milestones.
21
Despite, milestones function as control points for senior management,
autonomy also means having a shared responsibility for the outcome. Therefore, teams
need a strong management capability, where senior management truly grasps and accepts
the consequences of this uncertain adventure. This study shows that a shared long-term
perspective will facilitate autonomy. This long-term perspective, a vision, will stimulate
employees to execute a business model innovation, but employees also request some
intermediate steps. This study found out that a business model roadmap could fill this
gap. The dynamic capability of business model roadmap enables the creation of a
business model that meet the current needs, and sets out a roadmap for future changes of
the business model to meet the anticipated needs.
5.2. The Deployment of New-to-the-Firm Business Models
Firms need to develop a deep understanding of the need to change towards a new
business model before the actual implementation of the new business model. Although,
this study differentiates the creation and deployment of business models, the findings are
in line with Sosna, Trevinyo-Rodriguez, & Velamuri (2010) that these are acting more
parallel than in a pure chronological order. Unfortunately, there are no recipes for the
deployment of a new-to-the-firm business model, it, thus, requires strong dynamic
capabilities, as well mentioned by Teece (2007). This empirical investigation shows that
the implementation of new-to-the-firm business models require a firm to search for new
logics. In this search for new logics, sustainable ownership of senior management for a
business model innovation increases the chance of survival. In alignment with the
conclusion of the right autonomy, shared responsibility is also a condition for continuity,
having the same person of senior management take sustainable ownership. This
conclusion, again, challenges the relationship building capability, as well as preferably
the relationship maintaining capability of firms.
Senior management involvement is relevant in business model innovation, due
to the strategic relevance. Moreover, the performance of teams is the utmost important
factor in business model innovation. This study found that a core team, which is involved
from the start, is the most valuable for a business model innovation. Teams also need
emotional support to execute this enormous assignment, which has also been mentioned
by Russell (1999). Following the argument of core teams, this study also discovered that
dynamically changing the team competencies accelerates the deployment of new-to-the-
firm business models. This conclusion aligns with the multiple maturity levels of a
business model innovation, where other competencies will better suit different maturity
levels. In addition, this study found empirical evidence for building multidisciplinary
teams, which could co-create business models, within maturity levels, instead of only
over multiple levels of maturity.
This study has already made clear that the implementation of a new business
model requires a firm to change. Due to a business model innovation in the deployment
phase, the operational way of working of the firm will have to adapt to that new business
model. Therefore, a firm need implementation skills (Osterwalder et al., 2005), also
found in this study. However, firms are constantly improving efficiency of their current
business model, which leaves little space for a new business model. Therefore, dynamic
capabilities become a necessity in change management of business model innovation.
This implies that the owner of a business model innovation should not only sell the new
business model to customers, but also lobby towards the firm itself. This strongly
validates the co-creation way of business model innovation.
22
Throughout all conclusions, supported by empirical evidence, it became clear
that specifically tailored resources of the firm are enablers for business model
innovations. These resources must be custom-made, due new-to-the-firm business
models are by nature different. Often cited examples of custom-fit resources in this study
are legal support, design skills, rapid prototyping team, financial modelling or market
forecasting. These resources should act as building blocks fit-for-business model
innovations, what Russell (1999) calls an organizational support system. The dynamic
capability to organize and provide these specific resources should at least align with the
way of working of these business model innovations. The iterative development of
business model innovation is not equal to a stand-a-lone business, so as well recalibrate
the prioritization of the departments who provide these specific resources. Another
prerequisite for the specific resources for business model innovations is that the
departments who deploy those resources have a deep understanding of the journey of
business model innovations.
Lastly, this paper sheds light on the importance of focusing on de-risking new
business models. Aforementioned, a method to do so is co-creating and co-validating all
key assumptions with important stakeholders. This could result in a minimum viable
business model, after which the validation of the minimum viable business model lead
the way to a first outline of the proposed service. This empirical investigation found out
that the most appropriate validation mechanism of the proposed service is paying
customers, resulting in service – customer fit. Having deployed the new business model
paves the way to grow the customer base, and scale from a business towards a profitable
business. Although, this study did not identified another fit, each sale is a validation of
the service – customer fit, which is therefore always relevant. See Figure 6, for the
conceptual model based on the findings.
Figure 6. Conceptual Model based on the Findings
23
6. Discussion
6.1. Practical Implications
This study provides firms with an empirical case of how teams execute business model
innovation. The proposed conceptual model show multiple dynamic capabilities who
could act as enabler for the different maturity levels of business model innovations. With
this model, venture leads can better structure their business model innovation, and work
towards the different fits. These consecutive maturity levels facilitate a better
understanding of the business model innovation and allow teams to iteratively develop
their proposition within the boundaries of this framework. The dynamic capabilities that
enable business model innovation became clearer in this study, which all boils down to
reducing the risk, and thereby improving the chance of success. During the development
of a business model, markets and customers are rapidly changing. The dynamic
capability of business model roadmap could help teams to create a business model that
meet the current needs, and sets out a roadmap for future changes of the business model
to meet the anticipated needs.
The outcomes of this study provide guidelines for senior management to define
the right autonomy, supported by clear milestones. When senior management and
venture leads have identified the appropriate form of autonomy, this relationship should
fuel the focus of the ventures to accelerate their business model innovation. During their
self-governed progression, senior management must ensure sustainable ownership,
which requests a different way of organizing. Another key finding of this study is that
meanwhile business model innovations progress, the competencies of the teams must
remain well connected to their current maturity level. This study proposes to dynamically
change the team competencies per maturity level, which practically implies that different
employees are needed in different stages of a business model innovation.
The results of this study could be used by firms to re-organize themselves to
fuel the creation and deployment of new business models. The conceptual model of this
study provides structure for the lifetime of a business model innovation, and proposes to
use dynamic capabilities, which are able to enable these business model innovations. It
became clear that the acceleration of such business model innovation often arouses due
specifically tailored resources of the firm. These results allow firms to establish building
blocks fit-for-BMI throughout different departments not only to support business model
innovations, but also to stimulate the entrepreneurial character of the firm.
Lastly, this study focuses on firms, and especially ones who use corporate
venturing as an innovation strategy. So, the results are mostly suitable for internal
corporate ventures, and their stakeholders, but could as well be employed in running
businesses. Not only senior management will benefit from this study, especially venture
leads will take advantage of the results, as they are on a daily basis busy with business
model innovation.
6.2. Limitations and suggestions for Future Research
Although this study has discovered interesting findings regarding business model
innovation, there are also limitations that are important to consider. This study has five
limitations. First, this investigation was conducted in the context of Philips Research.
This research context limits generalization of this study’s findings, due to that, this
research is performed within only one organization. All interviewees work for Philips,
24
which might have biased the results. In addition, this investigation took place in a
research & development department, where emphasis is on the creation phase of business
model innovation. However, increasingly the focus of Philips Research is moving
towards business modelling, Philips still expect the development of new technologies.
Thus, it might be important to further investigate business model innovation within other
firms, in different contexts.
This study explored the phenomenon of business model innovation in the
context of corporate internal ventures. Not every firm is able to devote itself to corporate
venturing, and firms are not choosing to do so. The second limitation of this study relates
to the study’s unit of analysis, which only includes internal corporate ventures. This
organizational form is increasing its popularity in practice, but not mainstream yet, which
limits the ability to replicate this study. By virtue of that, it might be worth considering
to qualitatively test and extend these research findings in an operational business unit
setting. This should also clarify the difference between business model innovation and
internal ventures, because some interviewees had difficulties keeping both apart.
The third limitation stems from the fact that this study is an exploratory case
study, resulting in an arguable external validity. This exploratory case study existed of
six cases, which were all approached with the same case study protocol during data
collection, to ensure reliability. The senior management interviewees have invested
resources in the ventures, and all interviewed innovation officers have supported at least
one of the six cases. Although all interviewees relate to one of these six cases, future
research could employ a bigger and more diversified sample. This suggests that caution
is crucial when applying the results into practice. Interviewees noted several reasons for
the lack of generalizability, such as not fully executed a business model innovation and
the lack of current supporting structures of Philips Research. These comments might be
used for future research.
Fourth, this study tried to uncover the relation of dynamic capabilities and
business model innovation. The conclusion points out the benefit of dynamic capabilities
for business model innovation, and it suggests that firms organize specific resources,
which are able to accelerate business model innovations. But, this study lacks a concrete
interpretation of those specific resources. As business model innovation was sometimes
also fairly new to the interviewees, they provided suggestions how firms could
coordinate their resources effectively, but these were mostly given on an abstract level.
For firms that seek more guidance, it might be beneficial to devote a research to uncover
the specific resources that support business model innovations.
The conceptual model of this study is based on literature about the distinction
between the phase of business model creation and the phase of business model
deployment. The fifth limitation is that the application of the differentiation of Stampfl
et al., (2013) is quite new, and has not been widely used. New quantitative research could
extend the adoption of this theory, and, thereby, increase the usability of the key findings
of this study. In addition, the maturity levels of business model innovations could be
included in such a research, as they have been identified in this study. Then, future
research could improve the validity of the insights of this study.
Lastly, this study investigated business model innovation on an organizational
level. A key finding to support a business model innovation is having dynamic team
competencies. Now, that the importance of a multidisciplinary team for executing a
business model innovation is clear, it might be worth considering studying business
model innovation on an individual level. Such a research could be designed to discover
personal competencies per maturity level of business model innovations.
25
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Appendix
Appendix A, Overview of Business Model Innovation Literature Review
Table 13. Overview of the Business Model Innovation Literature Review
Criteria Explanation
Definition
“At root, business model innovation refers to the search for new logics of the firm and new ways
to create and capture value for its stakeholders; it
focuses primarily on finding new ways to generate revenues and define value propositions
for customers, suppliers, and partners” (Casadesus-Masanell & Zhu (2013, p.464).
Trigger
Internal or External Factors (Comes & Berniker, 2008).
Threat or Opportunity factors (Bucherer, Eisert,
& Gassmann, 2012).
Degree of Novelty
1. Business model is new to the world (Stampfl, 2016).
2. Business model is new to the
industry/market (Stampfl, 2016). 3. Business model is new to the firm
(Stampfl, 2016).
Phases
Design and Implementation phase (Sosna,
Trevinyo-Rodriguez, & Velamuri, 2010). Exploration and Exploitation phase (Andriopoulos & Lewis, 2009. Conceptualization and Realization phase
(Stampfl, Prügl, & Osterloh, 2013). Creation and Deployment phase (Stampfl, 2016).
29
Appendix B, Interview Guide
The main research question should lead to dynamic capabilities for Philips to enable, and support, the
creation and deployment of new business models. The following main research question shall be addressed:
Main research question: Which dynamic capabilities enable firms to create and deploy new business models?
Sub-Questions
1. Why, and when, does business model innovation start?
2. What are the stages of business model innovation? 3. Which dynamic capabilities enable business model innovation??
The research goal of this study is to get a deep understanding about, and help firms, with the creation and deployment of new business models. A conceptual model based on the literature review will be confronted
with the gathered data, of all interviews. By finding answers to these questions, this research aims at
contributing to academic literature as well as managerial practice regarding the management of business models.
The purpose of the interviews Understanding the triggers of business model innovation
Get insights about the stages of business model innovation
Develop an overview of the dynamic capabilities, which enable business model innovation
Introduction of the interview
1. Welcome the interviewee, and thank him/her for attending. 2. Explain purpose of research and interview, emphasizing that it is interviewee’s own opinions that
are important.
3. Ask if interviewee is willing to participate in interview, and stress this is their decision. 4. Ask the interviewee for permission to record the interview.
5. If willing, ask the interviewee to sign the consent form, if not, thank him/her for their time and close
the interview.
Important to mention.
If the interviewee does not feel comfortable during the interview, the interview could always be paused or stopped at any moment in time. The gathered data will be handled confidential, and anonymous. It will not be
able to track back to the names of employees of Philips Research.
30
Questions for Venture Leads
Role: Building a venture
First, ask for interviewees:
- Background (business, technical, etc.)
- Venture Type (where working on)
- Amount of time working on venture (full-time / part-time)
- Role & Responsibilities (within venture)
- Amount of ventures worked on (previously or parallel)
- Previous roles within Philips
- Amount of time working for Philips
Explain the three phases of the interview: I. The trigger of business model innovation
II. The stages of business model innovation
III. Dynamic capabilities as enablers for business model innovation
Note: Balancing between general questions for BMI, and BMI specific questions.
First round = Trigger
BMI
1) First, please share your positive story of your business model innovation.
Try to focus on example of BMI.
2) What was the trigger to start with business model innovation?
(internal and/or external to Philips)
3) Is your business model new to Philips, new to the industry/market, or new to the world?
Personal
4) Why have you joined your BMI group, with which motivation?
Extra
Starting date, ending date.
Definition of BM, and BMI
Participating employees in venture
BMI, or product / process/ service innovation.
New BM, or re-configuring existing BM
Stage of Industry Life Cycle
1. Demise of current business model
2. Need for adaption to changing business environments
3. Bringing a new technology, product or processes to the market
4. Growing with a new business model
5. Experimenting with and exploring new business models for the future
31
Second round = Stages
Stages
1) Could you elaborate a bit on the stages of a business model innovation? 2) How independently, with your team, have you executed the business model innovation?
3) What resources were of great help during different BMI stages?
Iterations
4) Have you (parallel) tested different business model concepts?
5) What kind of iterations have your BMI been through? 6) Now, could you outline the different stages you went through?
Extra
Linear, iterative process
Amount of pivots / iterations
Stakeholders
Contact with people within Philips (coaches, mentors, leaders, specialists)
How being assessed
Third round = Dynamic capabilities
1) What impact do ventures working on business model innovation have on Philips?
2) What were the drivers for your successful business model innovation?
3) What were the barriers for your successful business model innovation?
4) Have you experienced resistance? (internal / external)?
5) How did Philips facilitated you to search for new ways to create and capture value for their
stakeholders?
Thank you. Would you like to add anything to our discussion, or do you have remarks / questions?
Extra
Successful elements of your business model
Idea champions
Team
Involvement of top management (support, resources, financials)
Creating or re-shaping Philips
Philips parallel serve the old and the new business model well
Aspects that accelerated BMI
End of BMI process
Responsibility
32
Questions for Innovation Program Managers
Role: Assessing and funding a venture
First ask for interviewee’s:
- Background (business, technical, etc.)
- Venture Type(s) (where working on)
- Amount of time spend on venture
- Role & Responsibilities (for venture)
- Amount of ventures worked on (previously)
- Previous roles within Philips
- Amount of time working for Philips
Explain the three phases of the interview: I. The trigger of business model innovation
II. The stages of business model innovation
III. Dynamic capabilities as enablers for business model innovation
Note: Balancing between general questions for BMI, and BMI specific questions.
First round = Trigger
BMI
1) First, please share a positive story of a business model innovation.
Try to focus on example of BMI.
2) What was the trigger to start with business model innovation? (internal and/or external to Philips)
3) Mostly, are business models new to Philips, new to the industry/market, or new to the world?
Personal
4) Why have you backed a BMI venture, with which motivation?
Extra
Starting date, ending date.
How many ventures have you backed
Definition of BM, and BMI
BMI, or product / process/ service innovation.
New BM, or re-configuring existing BM
Stage of Industry Life Cycle
Decision-Making Unit
33
Second round = Stages
Stages
1) Could you explain the stages of a business model innovation? 2) What is the purpose of BMI within Philips?
3) How are you assessing a BMI?
Your role
4) How are you helping a BMI to become a success? (network, resources, operational, funds)
5) Which resources are of the greatest help for BMI?
Extra
Selection Criteria
Decision Making Unit
Involvement top management
Stages of a BMI
Assessing a iterative process
Difference in assessing new-to-Philips, new-to-the-industry, world
Independence of ventures
Third round = Dynamic capabilities
1) What impact do ventures working on business model innovation have on Philips?
2) What were the drivers for your successful business model innovation(s)?
3) What were the barriers for your successful business model innovation(s)?
4) Have you experienced resistance? (internal / external)?
5) Are you still responsible for ventures executing a business model innovation?
Thank you. Would you like to add anything to our discussion, or do you have remarks / questions?
Extra
Team
Successful elements of your business model
Idea champions
How do you protect your ventures? (within Philips, and without)
Involvement higher management (support, resources, financials)
Creating or re-shaping Philips
Philips parallel serve the old and the new business model well
Aspects that accelerated BMI
End of BMI process
Responsibility
34
Appendix C, Interviewee Labels
Table 14. Interviewee Labels
Role Interviewee Number Venture Phase
Innovation Officer 1 8
Venture Lead 2 4 Deployment
Venture Lead 3 11 Deployment
Senior Management 4 13
Innovation Officer 5 1
Venture Lead 6 3 Creation
Senior Management 7 7
Venture Lead 8 5 Creation
Venture Lead 9 14 Deployment
Senior Management 10 10
Innovation Officer 11 6
Senior Management 12 9
Venture Lead 13 12 Creation
Innovation Officer 14 2
35
Appendix D, Summary of the Findings of Creation Phase
Table 15. Summary of the Findings of the Creation Phase of Business Model Innovation
Foundational Aspects for Dynamic
Capabilities to enable New-to-the-
Firm Business Models
Dynamic Capabilities that enable New-
to-the-Firm Business Models
o The necessity of business model
innovation is clear and seen as the survival method for firms in their
rapidly changing environment.
It all starts with which problem a team is
solving, and for whom. The trigger to start with BMI is the need for a ‘new’
business model, which often is a
Problem-based Value Proposition.
o Because the thoughts of employees are fully anchored in the current
business model, the biggest barrier to
start a business model innovation is the mindset to see, and execute, new
business models.
A business model innovation has multiple maturity levels, reached through
fits, by iteratively co-creating & co-
validating business model options.
Business model innovations need
autonomy, as well as access to resources.
Both are incentivized by defining clear milestones, which is appreciated by the
team.
A business model roadmap facilitates
creating multiple business model options, and enables the team to continuously
track all listed assumptions.
Appendix E, Summary of the Findings of Deployment Phase
Table 16. Summary of the Findings of the Deployment Phase of Business Model Innovation
Foundational Aspect for Dynamic
Capabilities to enable New-to-the-
Firm Business Models
Dynamic Capabilities that enable New-
to-the-Firm Business Models
o The toughest task of business model
innovation is the actual implementation of the new business
model. Manage the change within the firm, by being transparent from the
start, and having the knowledge that
the team not only sells to the intended customer, but also to the firm.
Important to have a diverse set of team
competencies, per maturity level. Have a dedicated core team for continuity, and
strengthen the team with the necessary expertise per maturity level.
Measure the amount of risk of a proposition, and associated business
model, by the build-in-barrier. Most
reliable method to de-risk is test and validate with (potential) customers.
Team need to focus on bringing business model to market. Firm organizes specific resources, which are explicitly tailored for business model innovations.
36
Appendix F, Conclusion of the Findings
Table 17. Summary of the Findings Contrasted with Conceptual Model based on Literature Review
Literature
Review Topic
Theoretical Assumptions Empirical evidence Conclusion
Trigger
Internal or External Trigger
(Comes & Berniker, 2008)
Threat or Opportunity Trigger
(Bucherer, Eisert, & Gassmann,
2012)
There must be a
Problem-based Value
Proposition as Trigger
to start with BMI.
Business model
innovation is seen as the rescue for firm’s
survival.
The link between
internally developed
technology and an
externally customer
need is a problem-based value
proposition, which is
the trigger for BMI.
The necessity of
business model innovation is clear and
seen as the survival
method for firms in their rapidly changing
environment
Additional Findings
There is a psychological barrier to start with
BMI.
Psychological barrier to start BMI, due to
current business model.
Business Model Creation
Strong Management Capability (Osterwalder et al., 2005)
Iterative Development (Sosna, Trevinyo-Rodriguez, &
Velamuri, 2010)
Autonomous Development
(Russell, 1999)
Organize, and Track, a Business Model
Roadmap.
BMI is not a Process, but rather has Maturity
Levels.
Define clear Milestones
for Autonomous Development.
A business model roadmap facilitates
creating multiple
business model options. In business model
dashboard, track all
assumptions, and show strategic relevance.
A business model innovation has multiple
maturity levels, reached
through fits, by iteratively co-creating
& co-validating
business model options.
Business model
innovations need autonomy, as well as
access to resources.
Both are incentivized by defining clear
milestones, which is
appreciated by the team.
Business Model Deployment
Emotional Support (Russell,
1999)
Change dynamically the
Team Competencies.
Build a multi-
disciplinary team to co-create solution. Have a
dedicated core team for
continuity, and strengthen team with
necessary expertise per
maturity level.
37
Business Model
Deployment
Implementation Skills
(Osterwalder et al., 2005)
Organizational support system
provide resources (Russell, 1999)
The Implementation of a
Business Model
Innovation is changing the operational way or
working of the Firm.
Organize Specific
Resources for Business Model Innovations.
Manage
implementation, and be
transparent from the start. Manage to sell to
customers, as well as to
the firm.
Team need to focus on
bringing business model to market. Firm
organizes specific
resources, which are explicitly tailored for
business model
innovations.
Additional Findings
Focus on De-Risking
‘new’ Business Models.
Co-validate all key
assumptions, with all
stakeholders. This should result in a
Minimum Viable
Business Model. Then test with (potential)
customers.
38
Appendix G, Coding Scheme
Table 18. Coding Scheme
First-Order Codes Categories Second-
Order
Themes
Aggregated
Theoretical
Dimensions
BM
Phases
“The difficulty I … are privately owned”.
Autonomy Autonomous
Development
Dynamic Capability that enables New-
to-the-Firm
Business Models
Creation
“I have an … dominant business model”.
“We call ourselves … but not isolated”.
“Crucially for success … have some
independence”.
“Autonomy, but also accountability”.
“Well, yeah, we … of exploring others”.
Barriers for
executing
Business Model Innovation
Psychologi-
cal Barrier
Foundational Aspect for Dynamic
Capabilities to
enable New-to-the-Firm Business
Models
Creation
(Trigger)
“The second one … a mindset thing”.
“We have built … the next stage”.
“The point is … struggle we have”.
“We called that executive sightseeing”.
“I do think … a business model”.
“The barrier is … something completely new”.
“The proof of … what it is”.
“If you are … that much money”.
“The whole operational … implement it well”.
“Yes, that is … be very cheap”.
“Without huge investments … time nor
money”.
“That was one … is being changed”.
“Barrier is, the … is executed nowadays”.
“Those extractions only … to have focus”.
“That is possible … are elaborating on”.
“Resistance is maybe … could do
investments”.
“So, we had … of to customers”.
“”Not on a … lot of effort”.
“Yes, but then … to earn money”.
“You have to … able to test”.
“There is a … constitutes a business”.
Business Model
Innovation
Business
Model
Roadmap
Dynamic Capability
that enables New-
to-the-Firm Business Models
Creation
“As I said … stage gate process”.
“It is how … some of them”.
“So, the technical … business models are”.
“Ventures are very … in business models”.
“You could go … it for somebody”.
“Now, with the … real problem is”.
“If we are … make a blend”.
“Yes, what I … not here anymore”.
“Customers would like … more into services”.
“I do think … invest in capabilities”.
“I see business … and customer defined”.
“If these are … a natural sequence”.
“BMI tend to … is very broad”.
“So, it needs … or monetizing value”.
“We are looking … validation and learning”.
“You also said … updating the document”.
“Very abstract. You … you can innovate”.
“There is no … is most difficult”.
“That is a … as a business?.
“That is a … the business model”.
“Validation of business … grasps the essence”.
“But, I do … it often fails”.
“Ultimately, it is … will pop up”.
“Well, it was … I should say”.
Stages of Business Model
Innovation
Levels of Maturity
Dynamic Capability
that enables New-to-the-Firm
Business Models
Creation
“Because they had … helps a lot”.
So, checking if … to make money”.
“And it need … difficult to change”.
“So, we have … maturity assessment tool”.
“And, that is … mainly looking at”.
“Then it is … that the others”.
“In business model … your business model”.
“Frans himself made … quite a bit”.
“So, then you … with your eco-system”.
“You are talking … years has done”.
“For certain inflexion … donate the money”.
39
“There is not … do we need”?
“From different business … multiple business
models”.
“So, that means … I call it”.
“You need to … is relatively easy”.
“You could as … new business models”.
“We, of course, … with our customers”.
“In the business … how to scale”.
“It is very … your business model”.
“The challenge is … business model fit”.
“At later stages … be small adjustments”.
“The key performance … and the market”.
“I think it … the real problem”.
“From growth to … completely different
focus”.
“We have looked … lot important pivots”.
“We involve the … more ambitious plan”.
“Business model in … we typically do”.
“You need to … to something else”.
“It all starts … to the finish”.
“With pre-seed that … it becomes fluid”.
“Problems, and we … time and risk”.
“In October, we … really start selling”.
“If you think … reach that state”.
“Other people say … a long-term perspective”.
Story / Example
of BMI
“The biggest change … contracts with
hospitals”.
“I should start … the problems be”.
“Only one thing … management should
change”.
“For me it … sense to scale”.
Drivers for successful BMI
Team
Competen-
cies
Dynamic Capability
that enables New-to-the-Firm
Business Models
Deployment
“So, it is … going to work”.
“Number one: They … child too much”.
“One wonderful example … compete with
ourselves”.
“The second thing … sense of business”.
“For me it … sense to scale”.
“So, you also … Yes, absolutely, absolutely”.
“The third thing … well, think multi-
dimensional”.
“Focus”.
“Giving people relatively … of great help”.
“Good entrepreneurs are … goal they have”.
“I think it … kill it quickly”.
“And for the … will also help”.
“On the one … all about balance”.
“Yes, we had … the co-creation role”.
“And those people … lot of business models”.
“And you need … a scalable success”.
“You need to … enrich each other”.
“Besides that, mindset … somewhere around
you”.
“Focus on business model”.
“Or start with … a higher energy”.
“We have created … owns the money”.
“To summarize, all … test them all”.
“Then prioritize which … are really validated”.
“Most important success factor … reach such
people”.
“Because we are … years from now”.
Impact of BMI Implemen-
tation
Foundational
Aspect for Dynamic Capabilities to
enable New-to-the-
Firm Business Models
Deploy
ment
“We want to survive as a company”.
“I think it … you competitive advantage”.
“The new business … kind of structure”.
“Ultimately, venturing is … is widely
resourced”.
“But people are … not any sense”.
Personal motivation
Rescue for
Firm’s
Survival
Foundational
Aspect for Dynamic
Capabilities to enable New-to-the-
Firm Business
Models
Creation (Trigger)
“The total assignment … appeals to me”.
“And that is … an adaptive process”.
“Really working towards … be very exciting”.
“The drive, the … to the patient”.
“We are part … not want to”.
Role of Philips Dynamic Capability
that enables New-
Deploy
ment “Haha, rock ‘n roll … lot of speed”.
“I think that … back within Philips”.
40
“That is what … lot more things”. De-Risking
Business
Models
to-the-Firm
Business Models “We should had … also for Philips”.
“That changed a … times from owner”.
“Yes, but that … is a lot”.
“Then you will … and then.. then..”.
“As research, we … it is done”.
“I think it … takes it over”.
“You need to … to really understand”.
“We of course … apprehensive about it”.
“And that is … relationship building
capabilities”.
“That ideas are … or process-led”.
“Have to say … that is on-going”.
“But the way … way they work”.
“We all have … is already planned”.
“Not for me … and check them”.
“Yes, that is … you are off”.
“Cool! In fact … case they contribute”.
“That is what … to know something”.
“New perspective, technology … going to
work”.
“We constantly were … has to improve”.
“In my opinion … as a start-up”.
“If people are … see a process”.
“Indeed, and if … company benefits from”.
“So, well basically … replace the functions”.
Start / Trigger
of BMI
Problem-
based Value Proposition
Dynamic Capability that enables New-
to-the-Firm
Business Models
Creation
(Trigger)
“So, business model … capitalize our
position”.
“The real trigger … office of Philips”.
“So, the original … a business strategy”.
“They started to … is reasonably top-down”.
“Because budgets are … to a company”.
“Two triggers. One … the other side”.
“I would like … to search for”.
“Making sure they … and 90% sweat”.
Valuable
resources
Specific
Resources
Dynamic Capability
that enables New-
to-the-Firm Business Models
Deploy
ment
“Where I fully … can reflect with”.
“In certain stages … the key things”.
“So, there are … for every stage”.
“I would like … to someone else”.
“The beta people … running a business”.
“Yes, but that … with the team”.
“From zero to … a mature business”.
“So, the capabilities … outside of Philips”.
“We wished to … is always realized”.
“Now, all ventures … much more efficient”.
“I think in … takes that away”.
“I do see … all the ventures”.
“At the start … much less support”.
“Yes, at the … are being fired”.
“What I say … swiftly integrate them”.
“Which tools you … in that way”.
“Besides own resources … some data
analysts”.
“Yes, I think … what important is”.
“I am not … spread it faster”.
“Legal, for example. … not adding value”.
“Regulatory really gave … is really important”.
“We are now … really starting up”.
“On the first … in another way”.
“People like Bren … to keep pushing”.
“And partly it … the business side”.
“You are asking … in your proposition”.
“Have a clear … is most important”.
“It certainly requires … strong management
capability”.
Organizational
capabilities
“Otherwise, you get … on the short-term”. “The psychological barrier … mentioned by
themselves”. “We are not … in the business”. “Ventures should be … all different ventures”. “But just an … speed, commercial validation”. “Give the ventures … all of them”. “Important that we … it is successful”. “You need to … drive breakthrough
innovation”. “And overall, zoom … of playing outside”. “Look, a business … it is starting”.
41
“It feels as … really take ownership”. “Then, you need … also use them”. “Approval from a … not a process”. “Philips Design, and … to think out-of-the-
box”. “Pretty much actually … is very nice”. “To start partnerships … have enormous
damage”.
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